Cash dispersed across wallets.
Russian Currency Purchases: A Mixed Bag
Here's the skinny on the latest trends in Russian currency buying: for the fourth month in a row, Russians are buying more currency than they're selling. In April, this difference amounted to an impressive 68.5 billion rubles on the exchange and over-the-counter markets, according to the Central Bank. This shift in currency transactions by physical persons represents a significant increase from March's figure of 48.5 billion rubles.
Overall, the interest in currency among Russians is currently at an all-time high since the end of 2024. This rise is fueled by a combination of factors: the strengthening ruble and increased spending, explains Natalya Pyrieva, the leading analyst at "Cyfra Broker". Springtime brings holiday preparations, vacation season, and academic milestones, all of which add to the demand for foreign currency.
Currency Market's Illogical Leaps
It's important to note that the behavior of the population can sometimes be, well, pretty illogical. During periods of currency strengthening, for example, it's typically the case that people sell their currency. So the trend that started in March and continued through April could be hinting at a potential shift in the near future—from a strengthening ruble to a weakening one. This shift could also serve as a protective measure for individuals anticipating the ruble won't remain strong for long.
In April, amidst geopolitical news, the Russian currency began to steadily rise. The dollar rate reached its lowest level in two years on May 15, falling to 80.5 rubles. Consequently, banks introduced a commission for selling new dollar bills—roughly 200 rubles per hundred. According to Sofia Donez, chief economist at "T-Investments", this somewhat inefficient financial instrument is a natural response to the market's feeling that the ruble has temporarily been overvalued and overstrengthened.
The Cost of American Cash
Cash currency is a peculiar beast. It doesn't deliver a yield but, for some reason, we'd like it to. Even during periods of significant ruble weakening, cash barely manages to beat Russian inflation, making it an insufficient shield for our savings. So, naturally, people start searching for tools that offer currency yield. Right now, deposits are primarily offering yuan-based ones with modest yields but at least some income. The alternative, of course, would be currency bonds.
In Q1 of this year, Russians withdrew more from foreign banks than they deposited, leading to a whopping 23% decrease in deposits or nearly 2 trillion rubles, returning them to early 2024 levels.
"Посчитано у нас" - Telegram channel "Ъ FM".
The trend of Russians buying more currency than selling, as observed since March and significantly escalated in April, might signal an upcoming shift in the ruble's strength, contradicting the typical behavior during currency strengthening. In the search for yielding currency, deposits offering yuan-based returns have gained popularity among Russians, with currency bonds serving as an alternative option.
